Duke Energy Corporation (DUK) | The Buildout — AI Infrastructure
The Verdict
Duke Energy is a regulated electric and gas utility. It generates, transmits, and distributes electricity through its utilities across the Southeast and Midwest, and delivers natural gas through its gas segment. In the AI infrastructure buildout, Duke supplies the regulated generation capacity and grid infrastructure that large data-center campuses need to energize, under long-term Electric Service Agreements.
| Market Cap | — |
| Revenue (TTM) | $33.3B |
| Revenue Growth | +7.6% |
| EBITDA Margin (TTM) | 46.0% |
| Net Debt | $89.1B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Executed data-center ESAs rose from about 4.5 GW at Q4 2025 to 7.8 GW at Q2 2026.
- Late-stage high-confidence pipeline of 15.4 GW, with conversion of the remainder targeted by H1 2027.
- $103 billion regulated capital plan for 2026–2030, plus $5–10 billion of upside tied to ESA conversion.
- Nearly two-thirds of signed ESAs are already under construction; gas program has 5 GW under construction and 2.5 GW in development.
- Carolinas rate-case settlement terms of 9.8% ROE, 53% equity, and sharing up to 10.3% reached for DEC; DEP agreement followed.
What We’re Watching
- Pipeline conversion pace: Q2 added only 0.2 GW versus 2.7 GW in Q1; H1 2027 conversion is the key test.
- Rate-case orders expected by mid-November 2026, and Carolinas Resource Plan order by year-end 2026.
- February 2027 capital plan roll-forward: whether the $5–10 billion ESA-linked upside enters the plan.
- Post-Q2 35 million equity units offering against prior 'no large block equity' language.
The thesis is intact and has strengthened on contracted load, but the Q2 signings slowdown adds uncertainty. The demand signal is real and the regulatory path in the Carolinas has de-risked, while the financing stack continues to grow. The open question is whether the remainder of the 15.4 GW pipeline converts to ESAs by H1 2027 at a pace that supports the 2028 earnings inflection.
Earnings Beat
Duke's Q1 2026 revenue was $9,178 million, up 11.3% year over year, with gross margin of 67.9% and EBITDA of $4,414 million. Reported EPS was $1.97; adjusted EPS was $1.93 versus $1.76 a year earlier. The quarter also included a 2.7 GW increase in executed data-center ESAs to 7.6 GW.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $9.2B | $7.9B | $8.2B | +11.3% |
| Gross margin | 67.9% | 30.5% | 51.8% | +1610bps |
| EBITDA | $4.4B | $3.5B | $4.0B | +9.4% |
| EPS | $1.99 | $1.52 | $1.77 | +12.4% |
| Executed data-center ESAs | 7.6 GW | ~4.5 GW | n/a | — |
more confident than ever— Management, August 4, 2026
Management tone: Management's tone stayed confident but became more candid in Q2, acknowledging that ESA negotiations are taking longer at times while repeating the H1 2027 conversion target.
Management Guidance
Duke reaffirmed FY2026 adjusted EPS guidance of $6.55–$6.80 and long-term adjusted EPS growth of 5%–7% through 2030, with management saying it expects top-half growth beginning in 2028. The 2026 FFO-to-debt target is about 14.5%, with long-term FFO-to-debt at 15%; the five-year capital plan is $103 billion. Management typically updates the EPS growth rate in the fourth quarter but says it will update out of cycle if anything changes materially.
Trajectory
Revenue accelerated into Q1 2026, reaching $9,178 million, up 11.3% year over year and 15.6% sequentially. Gross margin expanded to 67.9% from 51.8% a year earlier, and trailing-twelve-month free cash flow converted at 128% of net income. The revenue lift included pass-through fuel and purchased power costs, while depreciation and interest expense rose as the capital base grew.
The Model
The model projects FY+1 revenue of $34,500 million and EBITDA of $15,870 million (46.0% margin), rising to FY+2 revenue of $37,000 million and EBITDA of $17,057 million (46.1% margin). Near-term revenue is anchored by the regulated capital plan and modest weather-driven recovery, while FY+2 begins to capture the initial data-center energized load expected in H2 2027 into 2028.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $32.4B | $34.5B | $37.0B |
| YoY Growth | — | +6.6% | +7.2% |
| EBITDA | $14.9B | $15.9B | $17.1B |
| EBITDA Margin | 46.1% | 46.0% | 46.1% |
Projections are the median of 5 independent model runs. The model’s revenue sits 5.9% above analyst consensus.
Duke reaffirmed FY2026 adjusted EPS guidance of $6.55–$6.80 and long-term adjusted EPS growth of 5%–7% through 2030, with management saying it expects top-half growth beginning in 2028. The 2026 FFO-to-debt target is about 14.5%, with long-term FFO-to-debt at 15%; the five-year capital plan is $103 billion. Management typically updates the EPS growth rate in the fourth quarter but says it will update out of cycle if anything changes materially.
What Could Go Right — and Wrong
- Remainder of 15.4 GW pipeline converts to ESAs by H1 2027, triggering $5–10 billion of capital upside.
- Data-center customers energize on schedule starting H2 2027 and ramp through early 2030s.
- Gas build executes to 15 GW by 2031, with 5 GW under construction and 2.5 GW in development.
- Regulators adopt the DEC settlement framework by mid-November 2026 and approve the Carolinas Resource Plan by year-end.
- Economic development wins broaden: first-half 2026 secured $5 billion of investment and over 9,000 jobs.
- Pipeline conversion stalls: Q2 added 0.2 GW versus 2.7 GW in Q1, and the H1 2027 target slips.
- Gas build slips or overruns as industry labor and supply chain stay tight.
- Regulators trim ROEs or slow cost recovery in North Carolina or Indiana.
- Data-center customers delay or cancel despite contract protections, pushing first energy beyond H2 2027–2028.
- Financing needs grow: 35 million equity units were priced after the Q2 call on top of a $103 billion plan.
Looking Ahead
The next twelve months are defined by regulatory and conversion milestones. Orders on the DEC and DEP rate cases are expected by mid-November 2026, followed by the Carolinas Resource Plan order by year-end, the Carolinas utility combination effective January 1, 2027, and the five-year capital plan roll-forward in February 2027. Management targets conversion of the remaining late-stage pipeline to ESAs by the first half of 2027, with first contracted data-center energy expected in H2 2027 into 2028.
- Mid-November 2026DEC and DEP rate-case orders — Tests adoption of 9.8% ROE, 53% equity, sharing to 10.3%.
- Year-end 2026Carolinas Resource Plan order — Tests commission support for high-load-scenario resources.
- January 1, 2027Carolinas utility combination effective — All approvals received; targeted savings $2.3B through 2040.
- February 2027Five-year capital plan roll-forward — Whether $5–10B ESA-linked upside enters the plan.
- First half 2027Remainder of pipeline to ESAs — Conversion target for the remainder of the 15.4 GW high-confidence pipeline.
- H2 2027–2028Initial data-center customer energization — First contracted energy from signed data-center ESAs.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $30.4B | $32.4B | $33.3B | +6.6% |
| Gross Margin | 50.0% | 52.7% | 58.4% | +265bps |
| EBITDA | $14.3B | $14.9B | $116.6B | +4.0% |
| EBITDA Margin | 47.3% | 46.1% | 46.0% | 114bps |
| Net Income | $4.5B | $5.0B | $5.1B | +10.1% |
| Free Cash Flow | $48M | $8.2B | −$12.7B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)58.4%
- EBITDA Margin (TTM)46.0%
- Net Margin (TTM)15.4%
- ROIC4.9%
- FCF Conversion43.2%
- SBC / Revenue0.0%
The Company
Duke Energy is a regulated electric and gas utility headquartered in Charlotte, North Carolina, operating through direct and indirect subsidiaries under FERC and state regulation. Its Electric Utilities and Infrastructure segment provides generation, transmission, distribution, and sale of electricity to about 8.7 million retail customers across the Southeast and Midwest. The Gas Utilities and Infrastructure segment delivers natural gas primarily through Piedmont and Duke Energy Ohio and Kentucky. The AI buildout reaches Duke as data-center electric load signed under long-term Electric Service Agreements, not as a separately disclosed revenue line.
Duke runs a $103 billion regulated capital plan for 2026–2030 and owns a large regulated nuclear fleet of 11 reactors across six stations. It builds generation with a programmatic approach, using GE Vernova for turbines and Zachry Group for EPC work on the first three Carolinas gas plants, and finances the build with a mix of regulated debt, equity, minority sales, and tax-credit monetization. Management describes the current period as a 'once in a generation build cycle.'
Business Segments
Competitive Landscape
Duke owns the distribution and transmission system in its regulated territories, giving it a franchise position that is hard to bypass. The intel file notes that if Duke cannot deliver its planned generation, data center projects in the Carolinas and Midwest could face delays or relocate, though hyperscalers could shift to other utilities' territories. Management cites speed to power as a differentiator, while large-load tariffs and customer-protection mechanisms shape the competitive and regulatory dynamic.
Supply Chain
Duke sits between equipment suppliers and electric customers in a tightening power supply chain, securing turbines, EPC capacity, gas supply, and nuclear fuel fabrication ahead of the build.
More on DUK: Earnings recap